Citigroup Gets $20 Billion from U.S. Treasury for Preferred Stock

The U.S. Treasury has agreed to pump $20 billion into Citigroup in an effort to keep the financial institution from collapsing. Upon hearing the news of the bailout investors acted quickly, shooting shares in the bank up 50%.

With the $20 billion investment the U.S. Treasury will receive preferred stock. As part of the deal the Treasury would also guarantee up to $306 billion of loans and securities that remain on the bank’s books.

Following four consecutive quarterly losses Citigroup was facing collapse and approached the Federal Reserve and the FDIC in an effort to secure much needed cash. The $20 billion is expected to come from the $700 billion bailout package for financial institutions that was approved last month.

Despite the collapse of the bank Citigroup does not have to replace CEO Vikram Pandit or other top managers within the company.

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